Frog Economy?—A Reaction to Professor Reich’s Tortoise Economy

With great respect and much trepidation, I wish to challenge Professor Reich’s “tortoise” analogy, because he focuses so tightly on the challenge his tortoise faces in trying to climb to higher ground from the depths of a recession-already-underway, thereby obscuring a more fundamental question: how did the tortoise get into such a bad spot in the first place? As I see it, the starting point we choose for our analysis influences the policy options that can “occur to us”, and so, constrain our analyses, our evaluation criteria, and ultimately the recommendations we make.

Now, I agree with Professor Reich that “The underlying problem is structural, not cyclical.” My problem with his analysis comes down to his choice of a tortoise to his metaphorical heavy lifting. His tortoise started out already known for winning races against much faster opposition, through determination alone. His tortoise also started out at the bottom of a steep wall that any sensible, plodding tortoise would surely have spotted far enough ahead to turn around and head back out. So, Professor Reich’s tortoise metaphor would apply to only three types of tortoises: those that aren’t sensible enough to stay out of trouble, those that are determined to get into trouble, and those that trouble chases into the situation that he posits as “Tortoise Starting Point (here).

I wish Professor Reich would have chosen a frog to do his metaphorical work. As many people know, frogs have a peculiar trait: if we put a frog into a pot of cool water, and then heat the water slowly, the frog somehow overlooks the actual temperature of the water—and ends up being cooked. In contrast, if we heat the water rapidly, the frog will jump out of the pot. Apparently, at least at such relatively low temperatures, frogs are more sensitive to the rate of change of temperature than they are to temperature as such. In contrast, tortoises have problems negotiating steep (viz high rate of change) hills, but the actual altitude apparently doesn’t trouble them so much. Notice, too, that the frog story accounts for the frog’s presence in the story: it starts out outside the story, and then we bring it in.

Here’s why I think the differences are important. It avoids the question I posed above, “how did the tortoise get into such a bad spot in the first place?” The frog analogy suggests that entrance into the deep structural problem that Professor Reich simply posited for his tortoises would have been very gradual, and so, taken a long time—likely beginning before anyone detected it—sort of like growing old! Were the entrance precipitous, we would have good reason to expect that the frog would avoid going there, on its own. I realize that even the best of tortoises are not 5.13c rock climbers, but it is possible that they could waddle down a “steeper” hillside (measured in distance downward divided by distance traveled) than a frog could (measured in degrees divided by time traveled).

If I am right in suggesting that the frog economy could only have gotten into the current mess “slowly”, then the frog problem has been eating away at the economy in the background, even as conventional political economists continued to speak of recessions and recoveries—as if business cycles had somehow acquired capacity for agency, including capacity to decide on their own the terms and measures with which they would admit of adequate description. Over an extended period, including an undetermined number of business cycles—that could be a lot of things.

Historical explanations are like that. They rely largely on coherence for being accepted.

Here’s my frog (and termite) story of how such tremendous structural problems developed in the US political economy. In the years immediately following World War Two, US workers took what was widely seen as being a series of huge losses. First, the Republican Party passed the Taft-Hartley Act, which really did severely weaken the ability of unions to organize. Then, unions (apparently) lost a series of big strikes. The price of those lost strikes was that unions agreed to limit collective bargaining to wages, benefits, and working conditions. I included “apparently” parenthetically, for two reasons. First, that is how I first learned it. Second, I want to argue that the outcomes of those strikes provided the impetus for the structural problems that Professor Reich mentioned.

In the sixty years since then, the ways of the world have demonstrated that both sides lost those strikes. It was immediately clear that workers and their unions lost. It was enough to make an American worker have a few rounds of beers and shots, and get hooked on watching professional sports, especially football, where everyone had a job to do just like at work, and a boss to tell them what to do and when to do it, in the person of the quarterback.

There were “skill people”, “big linemen”, “Coach Jones”, and of course “Mr. Smith”, the owner—all reproducing the hierarchy of the working world. In the late 1960s, “overtime” got added, first in the form of The Super Bowl, and later in the form of Monday Night Football. Compared to learning mechanics, thermodynamics, or evolution, all of those alternatives were either much easier or much righter—and could be controlled by the worker, not a boss, provided only that the worker showed up at work, at least nearly on time, at least nearly able to work at nearly 100 percent.

In the longer run, this amounted to a loss for owners, who can’t find technically savvy workers in this country—and then cite that “fact” as a beyond-argument argument FOR offshoring jobs. In effect, owners complain about the adverse effects of earlier decisions by previous owners to remove product design and production technology from the realm of collective bargaining. And workers complain about losing jobs they fought to have more of a say in, but lost—and have learned how to get by differently, until now.

Things could be different. The US could at least try to transition to a political economy more along the German lines. Why? Because as Thomas Geoghagen wrote in the March 2010 issue of Harper’s, it works for the Germans. According to Geoghagen, the German’s are “beating us”, and “managing to take six weeks of vacation every year”. Indeed, he writes: “Since 2003, it’s not China but Germany … that has either led the world in export sales or at least tied for first.”

How do German workers do this? Geoghagen offers three reasons:

the works council,

the co-determined board, and

Germany’s regional wage-setting institutions.

Why do I think these institutions would help reinvigorate the US political economy? Because their existence would, I hope, eventually convince every American to study harder and help each other learn. The workforce has become as dilapidated as the proverbial rust-belt factory. It took a long time for us all to get us all into this mess, and it’s going to take at least as long for us all to work ourselves back out of it. It won’t be easy, or fun. But if we don’t embrace learning what we might have learned had those early post-war years gone differently, we’ll end up dead in the middle of the road, and it won’t matter whether we think of ourselves as dead frogs or dead tortoises.

Comments

Our economy is slowly dying, it is kept alive artificially. No one is proposing a solution because no one has the slightest idea of why it is happening and many have vested interest in the present system. However an objective observation of the phenomenon can help us understand it and provide us with an innovative solution. Of course we can’t solve the problem with the tools that brought us there in the first place and we need a new ideology.

_______________________________

– Do you feel that your ideology pushed you to make decisions that you wish you had not made?

– Well, remember that what an ideology is, is a conceptual framework with the way people deal with reality. Everyone has one. You have to — to exist, you need an ideology. The question is whether it is accurate or not. And what I’m saying to you is, yes, I found a flaw. I don’t know how significant or permanent it is, but I’ve been very distressed by that fact.

– You found a flaw in the reality…(!!!???)

– Flaw in the model that I perceived is the critical functioning structure that defines how the world works, so to speak.

– In other words, you found that your view of the world, your ideology, was not right, it was not working?

– That is — precisely. No, that’s precisely the reason I was shocked, because I had been going for 40 years or more with very considerable evidence that it was working exceptionally well.

Thanks for your comment, Ryder. Your comment leads me to wonder, what does “political economy” mean to you? Based on your usage of the term, i’d day that you are completely unfamiliar with the concept beneath the term. Here’s the URL for Wickipedia’s “political economy”: http://en.wikipedia.org/wiki/Political_economy

I encourage you to take a moment to read through it. If you do, i think that you will see that not having a political economy is NOT a real choice; the only choice is not which kind of political economy you’ll have, but only which kind the you who was shaped by the political economy and life particulars that shaped you as you grew up (as mine did to me)–and which also shaped the distribution of power, including what counts as “right” and what counts as “wrong”, and how to go about distinguishing the two.

If you read with an open mind, i doubt that you will ever again say anything even close to what you wrote above: ” I could have easily ended the recession, almost over night with that much cash.” Why would anyone believe you? On your assertion alone? That’s not much to go on, especially for $1,000,000,000,000. For these reasons, in my view, your last sentence, with its equally unexplained “they”, seems more fairly to you: The fact that YOU couldn’t, is very telling.”

Ofcourse this ignores the fact that our economy has been cracking under pressures created BY political economies. The obvious answer is to NOT have a political economy at all, instead of searching for the least horrific failure. Government intrusion into the marketplace creates the market distortions that are the the cracks in an otherwise sturdy economic force that was the USA. It’s past time to face facts. Politicians don’t know squat about economies, and rarely have. For us to have spent $1T to end a recession, yet have it still here one trillion dollars later, is proof positive. I could have easily ended the recession, almost over night with that much cash. The fact that they couldn’t, is very telling.

Get politicians out of the markets. Get government entities out of markets.

President Obama said today his economic team is doing an “outstanding job.” I’m sure glad he didn’t say- heck of a job. For some time, I have thought he should have fired Geitner and Summers which would have indicated to the public he was (or appearing to be) extemely concerned with the economy. I note that Barbara Boxer’s commercials have been turned more positive touting all she is doing and has done to help get jobs. Accordingly, her poll numbers are rising as well and she now looks like she will have no problem in November. There is a lesson here for the President.

Thank you for your comment, ,Jay. All i can say in reply is that your entire argument for Senator Boxer’s apparent turn-about rest on YOUR “noting” (as in, “I NOTE that Barbara Boxer’s commercials have been turned more positive touting all she is doing and has done to help get jobs.” and on your asserting, as in “ACCORDINGLY, her poll numbers are rising as well and she now looks like she will have no problem in November.” Frankly, that doesn’t seem like a very well argued case”: I say it, so it’s true.” Sorry, but that’s not good enough.

Letcher’s German solution would help people who already have stable jobs, and the basically competent large firms (or govt agencies) who employ them. (In effect, our more enlightened firms or agencies employ the equivalents (perhaps less formal) of the German solution.)

But keeping our presently competent firms and people at work is only part of our problem here in the USA. How are we to get more jobs going, or lift up the not-sufficiently-trained unemployed, or put back to work the quite competent unemployed who lost their jobs?

Joe, thanks for your comment. Please check out my article titled with a quote from President Obama, “Education is THE economic issue of our time.” @ URL=http://www.laprogressive.com/education-reform/education-the-issue/. Please note my replies to a questioner. See also my first cut at that subject, “Technology as a System: An Approach to Creating Jobs” @ URL = http://www.laprogressive.com/economic-equality/creating-jobs/.

Somewhere along the way, i also asked for help in identifying opportunities potentially available for teaching teachers and up-educating workers. I also realized that the very structure an I-O table might itself get in the way of the very re-structuring of the economy that i’ve called for.

Thanks for your comment, Joe. Let me begin by replying that my maternal grandfather was an immigrant brick-layer who lost all five fingers on one hand in a construction site accident, back before there was an OSHA. Turning to the substance of your comments. First, the German approach has apparently generated more, better-paying, export-oriented, working people’s jobs than the US approach has. But more central to my argument is that the playing out of German social democracy over the half-century has given German workers structural incentives to understand the technologies that they work to produce and the means by which they produce them. For that reason, German companies are now better structured to take advantage of the shifting institutional arrangements that constitute and characterize the global political economy. In contrast, US workers lost those incentives, and for nearly a half-century US companies laughed all the way to the bank. Now that US companies, to get back into the game, need labor to provide what companies back then won from labor, it’s clear that everyone is hamstrung, tied-up in knots.
That was my motivation for writing two of my recent columns: the more recent one suggested a strategy for systematically up-educating workers; the other suggested a systems view of “technology” itself. Furthermore, I am aware of my own limitations, and i have been actively seeking advice on two matters: one is the actual detailing of categories discussed in the first column; the other centers on how to prevent the structuring of those categories from blocking transition to a more sustainable system structurally. Any ideas?

The Body Politic

Dave Zirin: She is our Jordan. She is our Jim Brown. She is our Babe Ruth, calling his shots. She is no longer content to dodge bullets, but understands how to stop them. Serena is that rare athlete who has not only mastered her sport. She’s harnessed it.